With S&P 500 revenue growth at just 2% from 2013 to 2016, organic growth is hard to come by even in the best of circumstances. Typical marketing and customer experience tactics, largely aimed at customer satisfaction, don’t deliver sustainable, profitable growth. Rather, they are merely table stakes – things you have to do just to stay in the game.
Companies are swimming in customer data and working hard to manage the customer experience, but aren’t sure how to focus their messages, touch points, and investments to drive growth and maximize ROI. Product and service innovations are typically short-lived and easily imitated, and consumers have more competitive choices and more access than ever. As a result, loyalty and lifetime value have decreased, and competition too often devolves to price-related promotional tactics.
How do we get back to understanding what really creates competitive advantage with customers, with the confidence we need to set a strategic course? Traditional sources of customer insight fall short, as there is a gap between what the customers can tell you and what really delivers the emotional connection that generates sustained profitable growth. Most companies, therefore, lack a 'true north' for defining a customer strategy that delivers predictable results. The role of the Chief Strategy Officer is to understand that 'true north' - the emotional motivators that drive sales and loyalty - and use that information to predict customer value and financial results.
Predictive analytics rooted in big data provides an answer. What motivates the customer is often unspoken, deriving from their underlying emotional values and needs. We now know that customer satisfaction and brand differentiation-based strategies no longer deliver much long-term shareholder value. The more sustainable and more valuable strategy is to focus on the 'emotionally connected' customer, who is worth up to 100% more on an annual basis than a highly satisfied one.
Mainstream strategies that deliver good quality, service, and value are now just 'table stakes'. Focusing on emotional connection instead taps into the customer’s deepest desires, such as a sense of freedom, being seen as successful, social acceptance, indulgence, and taking care of family. And the impact of resonating with those emotions – different by brand and by industry – can be measured, quantified, and predicted.
The difference between a highly satisfied customer and an emotionally connected one is evident everywhere from household cleaners and footwear (where emotionally connected customers purchase their chosen brand twice as much as highly satisfied ones) to consumer banking (where emotionally connected customers hold 40% more products with their bank). Similar multipliers have been measured across a range of industries including retailing, hospitality, technology, and even in B2B areas such as enterprise software and management consulting.
Applying this Emotional Connection Lens™ gives you insights and metrics that most competitors lack, and your Emotional Connection Score™ becomes a predictive KPI on the C-suite dashboard. The CSO’s role is to ensure that emotional insights are measured and managed to create results and competitive advantage.
I recently gave a presentation on Emotional Connection: A Predictive Metric for Chief Strategy Officers at Innovation Enterprise. If you didn’t have a chance to join me, you can see the video presentation online.